The Value Factor We undertook a detailed new home price study to determine what has happened to new home prices in the BASELINE

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1 The BASELINE CORRIDOR feature provides information relevant to all new construction taking place between the Salt River and South Mountain. Detailed listings of the Baseline Corridor homes can be found in the following general listing sections of The Ultimate New Homes Update: MLS area #208, #2, #25 and #50. by Bob Yarrow The Baseline Corridor is BOOMING! Currently there are 5 New Home subdivisions actively selling in the Baseline Corridor. Another are preparing for sales, i.e. they have at least begun site preparation. In the past fourteen months 9 New Home subdivisions have sold out in this area. This is one of the hottest selling areas in the metro area, and you need to see it! The NEW REALITY vs. the old perception If you have not been in the South Mountain area in the last three years, you owe it to yourself to make a short trip down the Baseline Corridor. You will be amazed at what you see and experience! The area is drastically different than it was just three years ago. You will discover today s reality VITALITY, VIEWS, VALUE and POTENTIAL - is drastically different than your old perception of south Phoenix. This area offers some of the least known housing gems in the Phoenix metro market today! In January 200 there were only eleven subdivisions in this area. A year prior to that the only developments were the Pines and the Legacy on 2nd Street north of Baseline. Today if you drive the twelve miles down Baseline Road you will pass nearly 50 new home subdivisions. A new Phoenix is rising from the farmland, desert and poverty of the old south Phoenix. Over 0,000 homes are scheduled to be built in the new home subdivisions currently under development. The Vitality Factor (Builder s Spend a Quarter of a Billion Dollars) There are 82 new home communities planned or being built in the South Mountain area. The Baseline Corridor is bounded by the Salt River on the north, South Mountain on the south, 8th Street on the east, and the Gila River Indian Community on the west (see BASELINE CORRIDOR map). Our calculations show that combined, the thirty six new home builders of these communities will be investing over $00,000,000 in land and infrastructure. Drawn by the building of over 0,000 new homes, many new retail businesses are now being built in this area and others are in the planning stages. Several new schools are either being built or are in the planning stages. Awesome Views and the Location Factor The most important thing in real estate is location. And, the location of the Baseline Corridor is fantastic! This area provides beautiful scenic views of both the mountains and the city. Because it is situated so close to the city center core, this area provides many of the advantages of Urban Living. All of the Baseline Corridor is within ten miles and twenty minutes drive time of downtown. Coupling this location with the ability to purchase a home offering fantastic value creates an opportunity that is available nowhere else in the metro area! The Value Factor We undertook a detailed new home price study to determine what has happened to new home prices in the BASELINE New in this 8th edition:. All maps were updated. 2. All data tables were updated.. Tracking of Upcoming Subdivisions added.. Retail section was updated and Laveen Village Center added. The total number of communities shown on the Baseline Corridor map is now 82, which is up from 66 sixteen months ago and down from 89 two months ago. The number of builders has increased from 28 to 6. September - October 200 (62)

2 No. Subdivision Builder Name Key Features MLS No. River Walk Villages Dorado Series Elliott Homes 5st Avenue & Southern 2 R2 2 River Walk Villages Classic Series Elliott Homes 5st Avenue & Southern 2 R2 River Walk Villages Signature Series Elliott Homes 5st Avenue & Southern 2 R2 The Foothills At Bougainvillea Engle Homes Arizona 2 R2 5 The Villages At Bougainvillea Engle Homes Arizona 2 R2 6 Cottonfi eld Ranch Homes By Ld Pappan 208 R2 7 Lookout Canyon At Sierra Madre D.R. Horton - Continental Series Upcoming 8 Cottonfi eld Ranch Capital Pacifi c Homes 2 R2 9 The Foothills At Dobbins Point Engle Homes Arizona 25 S2 0 The Highlands At Dobbins Point Engle Homes Arizona 25 S2 Morning Star At Sierra Madre D.R. Horton - Continental Series 25 S2 2 North Star At Sierra Madre D.R. Horton - Continental Series 25 S2 Sunrise Cove At Sierra Madre D.R. Horton - Continental Series 25 S2 Daybreak At Sierra Madre D.R. Horton - Continental Series 25 S2 5 Sierra Bella Beazer Homes 25 S2 6 Silverado Ranch Meritage Homes 25 S2 7 Rancho Verde Estates Hacienda Builders 2 R2 8 Sunset Vista At Sierra Madre D.R. Horton - Continental Series 25 S2 9 Rogers Ranch Ryland Homes 2 R2 20 Bridle Trailside Point Centex Homes 2 R 2 Vineyard Arlington Est. Trend Homes 208 R 22 Skyline At Sierra Madre D.R. Horton - Continental Series Upcoming 2 Mesquite Trailside Point Centex Homes 2 R 2 Park Meadows D.R. Horton - Dietz-Crane Series 208 R 25 Trailside At Laveen Village Courtland Homes 208 R 26 Oak Springs At Laveen Village Courtland Homes 208 R 27 Ash Creek At Laveen Village Courtland Homes 208 R 28 Arizona Belamar KB Home 208 R 29 Arizona Enclave KB Home 208 R 0 Mountain West Cornerstone Hms & Development 208 R Keningston Trailside Point Centex Homes Upcoming 2 Barcelona Series Providence Homes Upcoming Regal At Rogers Ranch Richmond American 208 R Vision At Rogers Ranch Richmond American 208 R 5 Rogers Ranch Ryland Homes 2 R2 6 Clover Farms Brown Family 208 R 8 Equestrian Trailside Point Centex Homes Upcoming Sterling At Lantana Estates Richmond American 208 R 2 Amber Ridge Trails Ryland Homes 208 R Amber Ridge Crossing Ryland Homes 208 R The Laveen Crossing Pulte Homes 2 R2 No. Subdivision Builder Name Key Features MLS No. 5 Vineyard Vista Great Western-K. Hovanian Co 208 R 6 The Laveen Crossing Pulte Homes 2 R2 7 Amber Ridge Montalbano Homes 208 R 8 Cameron Creek Great Western-K. Hovanian Co 208 R 5 Dobbins Crossing II VIP Homes 208 S 52 Colony At Silverado Richmond American 208 R 5 Rogers Ranch By Calex Calex Homes Upcoming 5 Rogers Ranch Brown Family Upcoming 55 Mountainside Estates Destiny Homes Marketing Mtn./City View Lots Upcoming 56 Rogers Ranch Brown Family Upcoming 57 The Enclave Pinnacle Builders Upcoming 58 The Heritage At Alta Vista Heritage American 208 R 59 Sierra Colina Beazer Homes Upcoming 60 Meridian Hills Charlevoix Homes Upcoming 6 Southern Views Charlevoix Homes Upcoming 6 Vista Rio Calex Homes Upcoming 6 Barcelona Series Providence Homes Upcoming 65 Fremont Cove Charlevoix Homes Upcoming 68 Laveen Meadows Elliott Homes Upcoming 69 Laveen Ranch Great Western-K. Hovanian Co Upcoming 7 Talasera At South Mountain Beazer Homes 208 S 7 Meadows At Laveen Meadows Standard Pacifi c Homes Upcoming 7 Village At Laveen Meadows Standard Pacifi c Homes Upcoming 75 KB Home Upcoming 78 Brighton Park Cambria Homes Upcoming 79 Dobbins Corner Calex Homes Upcoming 8 Southern Springs Rb Homes 208 R5 82 Roeser Park V&M Homes Upcoming 8 Preserve At Laveen Meadows Taylor Woodrow Upcoming 8 Mineral Canyon Destiny Homes Marketing Mtn./City View Lots Upcoming 85 Highline Ranch At South Mountain Destiny Homes Marketing Mtn./City View Lots 208 S5 87 Casitas Grande Sundance Development Upcoming 88 Hunter Ridge KB Home Upcoming 89 Mountain Grove Heritage American Upcoming 90 The Village At South Mountain Sonoran Family Communities Mtn./City View Lots 208 S5 9 Copper Leaf Trend Homes 2 R 9 Regency At Copper Leaf Trend Homes 2 R 95 Copper Leaf (III) Trend Homes Upcoming 96 Copper Leaf Classic Communities 2 R 97 Copper Leaf (V) Classic Communities Upcoming 98 The Gardens At South Mountain Frank Residential 208 R5 2

3 Exclusive Luxury-Inspired Elegance The Village at South Mountain FAMILY COMMUNITIES Luxury Estate Homes Starting From $6,000 90,000 Square Feet of Retail, Office and Restaurant Space Also Available

4 CORRIDOR in the last couple of years. From this we arrived at the conclusion that the average South Mountain area new home has appreciated at a rate substantially faster than the national average! The results and methodology used in this analysis are described in detail in the Best Home Values in the Valley section located later in this article. Although recent history is the best predictor of future value, other factors influencing home value need to be considered before coming to a home investment decision. New home value is impacted by location factors, amenity factors, cost factors and area potential. The location factor was described previously. Since homes in the Baseline Corridor are generally priced as well or better than other areas of the valley, value can be found in all price ranges. This area offers a great mixture of prices, ranging from under $0,000 s to over $700,000. Booming South Mountain Area The area between South Mountain and the Salt River has the highest concentration of new home construction of any continuous locale in the Phoenix metro area. The builders who have had the vision to build here have invested a huge amount into land, streets, sewers, model homes and other community amenities. This huge expenditure demonstrates their conviction concerning the vitality of the South Mountain area. This residential growth is now bringing significant retail development to the Baseline Corridor area. The total Baseline Corridor area is comprised of just over 50 square miles, and is shown in detail on the community map located previously in this Baseline Corridor section. Over 80 new home communities are being built (our current count is 82 subdivisions) in the South Mountain area. These subdivisions contain over model homes, most decorated and furnished for homebuyer viewing, 290 floorplans which can be built, and 65 spec homes currently under construction. The 6 builders currently building or with plans to build in the near future are listed in the following table. The quantity of communities listed as active include those being developed but not yet selling. Number of Baseline Corridor Communities by each Builder Builder Name 2 Beazer Homes 2 Brown Family Calex Homes Cambria Homes Capital Pacific 2 2 Centex Homes 2 Charlevoix Homes Classic Communities Cornerstone Hms Courtland Homes D.r. Horton - Continental D.R. Horton - Dietz-Crane 2 Destiny Homes Elliott Homes Engle Homes Arizona Frank Residential 2 Great Western-K. Hovanian Hacienda Builders 2 Heritage American Active Coming Selling ActiveBuilder Name Homes By LD Pappan 2 2 KB Home Meritage Homes Montalbano Homes Pinnacle Builders 2 2 Providence Homes 2 2 Pulte Homes Rb Homes Richmond American Ryland Homes 2 2 Sonoran Family Standard Pacific Sundance Development Taylor Woodrow Trend Homes V&M Homes Vip Homes 82 5 Our analysis shows the builders investments in the Baseline Corridor area total well over $00,000,000. We arrived at this number of over one quarter of a billion dollars as follows: 82 Quantity of Subs x 28 Avg. Lot Quantity / Sub 0,96 Total Quantity of Lots x $0,000 Avg. Cost / Lot $,880,000 Total Builder Investment If that number seems too large to be meaningful, then just look at the smaller investment of just fifteen million dollars to build, decorate and furnish the model homes. These builders have put their money where their mouth is! Doesn t this suggest strongly that a short trip to South Mountain would be a good investment of your time? Coming Selling We ve been building quality homes in the South Mountain area for more than 20 years! River Walk Villages in Laveen 5st Avenue & Southern. Communities with 9 fully-decorated models! From the $0s (602) w w w. e l l i o t t h o m e s. c o m Building in the Valley since 979. The Desert Willow shown, starting from the $60s. Co-Brokers welcome - up to %. ROC #529.

5 Growth Statistics We have been doing special tracking of development activity in the Baseline Corridor for months, and the chart to the right clearly shows that this is not a passing fad. We estimate Baseline Corridor New Home sales (contracts written) are running at over 600 sales per month for a sales volume of about $00,000,000 per month. Baseline Corridor Building Activity Period Ending Builder Qty Sub. Qty Subs Not Open for Sales Apr n/a Jun n/a Aug n/a Sep n/a Nov n/a Jan Mar May Jul You might interpret the growth statistics above as a slowing in the rate of growth in this area. However, the situation is the exact opposite of that. Over the past few months sales have accelerated significantly in this area causing subdivisions which are open to sell out faster than new communities are able to open. The column titled Subs Not Open for Sales actually paints a more accurate picture of what is happening in recent months in this area. The Baseline Corridor is quickly becoming the NEWEST area in Phoenix! Area Potential It will be the NEWEST in Phoenix Most of this review deals with what is currently happening in the area between Broadway Road and South Mountain. However, to get a true sense of the potential value, you need to look beyond the area that is already in sticks and mortar. So, when you are done driving Baseline Road and Southern Avenue, take a short side trip down Broadway Road and look to the north. This area has had a reputation for its poor and dilapidated housing, and there are still houses located here that fit into those categories. However, the thing that is most significant is what s missing. Buildings are missing from a large percentage of this acreage. They have been demolished and the land is accumulating into large enough blocks that it will soon be available for new development. I describe this situation because much of the land further south in the core of the Baseline Corridor has already progressed though this process. When you see vacant lots intermingled with poor housing you can see a glass half full or a glass half empty. Literally, you can see a poor neighborhood that seems to be deteriorating, or you can see the potential development which may be just over the horizon. This is a key point for anyone considering buying in this area. 5

6 Average Price of Subdivisions in the Baseline Corridor Fry s, and Safeway), major drug stores, (e.g. Eckert s, Osco, and Walgreen s) and sit-down restaurants. The char t map titled Retail Development in the Baseline Corridor gives graphical detail about the status of these retail developments. Again, in order to understand the true value of the Baseline Corridor area you need to look at the retail that is planned as well as what already exists. *The average price for each community is calculated by determining the average of the highest and lowest base price for the available plans in that community. Data is as contained in the Ultimate New Homes database July, 200. Soon, the area that for years has been the poorest in Phoenix will be the NEWEST in Phoenix! Subdivision Location by Price The map above shows the location by general pricing of the Baseline Corridor subdivisions. The most expensive subdivisions (average subdivision price of $20,000 or greater) are located nearest to South Mountain. In turn the least expensive communities (average subdivision price of $75,000 or less) are in the north. Between these two are communities with an average price between $75,000 and $20,000. Generally the subdivision price increases as the communities move to the south, i.e. closer to South Mountain. However, be aware that using just one price point, as we have done, to represent a subdivision only provides a general indication of where the homes fitting your needs may be located. All plan base prices are shown in the general listing section of this new home catalog. Retail is Coming (ALMOST HERE) In this section we have been saying for sixteen months the words Retail is Coming. That no longer is the case, it is ALMOST here! Two significant shopping developments have grown from the desert and will be completed in the next few 6 months: In the east - Legacy Village - and in the west Fry s Center. You can see photos of these two developments on the Retail Maps we have provided. The retail real estate development adage that it takes rooftops and disposable income to attract retail development has been proven true again. The thousands of new homes built in the last couple of years coupled with the 0,000 to be built in active subdivisions is fueling substantial retail development. The map titled Retail Development in the Baseline Corridor shows both existing, under construction and planned retail centers. For this ar ticle we have d e f i n e d r e t a i l development to i n c l u d e : m a j o r department stores, (e.g. Big K-Mart, Target, and WalMart), grocery stores (e.g. Basha s, Food City, 59th AVE. $75,000 and Less $75,000-20,000 $20,000 and Greater Proposed Laveen TownCenter Updated 8/200 LAVEEN RETAIL ACTIVITY (5st Avenue Corridor Legacy Village 2th St & Baseline Construction of this 0 acre shopping center which will include a Target Department Store, a Fry s Food Store, Famous Footwear, Ace Hardware, Anna s Linens, Jack in the Box, Applebee s, IHOP and Bank of America on the Northwest corner of 2th Street and Baseline Road began in November, 200. It is anticipated that the Target store will open for business by Christmas 200. Some of these buildings are fully enclosed. SOUTHERN AVENUE BASELINE ROAD LAVEEN AREA CONVEYANCE CHANNEL ELLIOT ROAD 5st AVE N DOBBINS ROAD 200. Ultimate Information Systems

7 2nd St & Baseline Rd Project Planned Another new retail project is being planned south of Baseline Rd. at 2nd Street. The businesses will face both the realigned 2nd Street and Baseline Road. Discussions are being held with major drug stores concerning the three acre parcel which will be east of the new 2nd Street (see Retail Development in the Baseline Corridor map). The total retail project is ten acres and will offer both retail and office space, with the retail on the first floor and office and medical space upstairs. The buildings will surround an open-air central courtyard which will create the relaxing atmosphere for the upscale outdoor dining and boutiquetype shops that are planned. Underground parking is currently anticipated. Laveen Village Center - 5th Ave & Baseline Developers are seeking clients for a major shopping center to be located west of the Circle K on the northwest corner of 5th Avenue and Baseline. This center is anticipated to have three major stores 5,000-25,000 square feet, pads for five free standing businesses, and numerous smaller retail shops between the major stores. Fry s at NWC Baseline & 5st Ave. A Fry s shopping center is to be located on the northwest corner of 5st Avenue and Baseline Road. This will be a beautiful upscale shopping center of the nature that you typically see in north Scottsdale. It is anticipated that Fry s will be open for sales around the beginning of Construction is underway. The initial phase of this project is 5 acres consisting of a large Fry s store, a Wells Fargo bank, a gas station, coffee shop, restaurants and other typical type of local stores that are located in community shopping centers. Retail space in this center is currently leasing. A second 25 acre phase, just to the west of phase one, is still in the planning stages. Retail Development in the Baseline Corridor 2 6 Retail Projects Being Considered or Planned No. Retail Store Status of Project Retail Seeking Occupants 2 Fry s Under Construction - Open Late 200 Safeway Planned Retail Seeking Occupants 5 Food City Planned 6 Retail Seeking Occupants 7 Target/Fry s Under Construction - Open Christmas Retail Zoned Commercial 9 Retail Zoned Commercial 0 Retail Seeking Occupants Retail Seeking Occupants 2 Retail Seeking Occupants Safeway at SEC of Baseline & 5st Avenue Laveen Ranch Marketplace is currently scheduled to open in late 2005 or early Safeway will be opening a 55,000 sq ft. store on this land that they own. The attractive store will face the corner of 5st and Baseline and will feature a stone and river rock exterior. Laveen Ranch Marketplace will also include a gas station, a Bank of America with three drivethrough lanes, a tire store, a restaurant and other shops. The developer is Evergreen Devco. Best Home Values in the Valley One question that always goes through the buyer s mind when buying a home is what will happen to property value. Is this home or a home in this area, going to increase or decrease in value? This question is particularly difficult to answer when there are a limited number of existing Existing Retail Coming Retail Under Construction Existing Retail Retail Store Location of Existing Retail Walgreen s NEC Southern & 9th Ave Ranch Market NEC Southern & Central Food City SWC Southern & Central Osco SEC Southern & Central Food City N of Baseline & E of Central Big K Mart N of Baseline & E rd St Fry s/walgreen s NWC Baseline & 7th St Safeway SWC Southern & 6th St Walgreen s NEC Baseline & 2th St homes of comparable value located in the same area. Since recent history is the best predictor of future home value appreciation, we undertook a detailed new home price study to determine what has happened to new home prices in the BASELINE CORRIDOR in the last couple of years. This Best Home Values in the Valley section addresses this question based on a thorough new home pricing data analysis for the Baseline Corridor area. This analysis may be a little more technical than you might desire, but the detail is essential to understand the methodology by which we reached our conclusion. At the time of this analysis there were 82 communities listed on the Baseline Corridor map. thirty six of these were used for the purpose of this analysis. Fifteen communities were excluded because they had very recently opened and did not yet have a price change or they have been 7

8 open for such a short period of time that their data would bias the averaging process. Thirty one of the communities listed on the map were not yet selling homes. The source of information for this analysis is the Price Change History maintained by Ultimate Information Systems, Inc. This basic data is available to any Realtor who is a member of the Arizona Regional Multiple Listing System (ARMLS) for each active plan or model in any active subdivision. To access the information the Realtor just clicks on the Price History link on the detail report of the plan or model of interest. The methodology is as follows:. Each subdivision was analyzed individually and then the subdivision percentages were averaged to come up with an overall percentage of increase. 2. The actual dollar value of the price change of each model was calculated by taking the difference between the selling price of the model when it was first available and the current selling price.. A percentage for the above price change was arrived at by dividing this change by the initial base listing price. The time over which this change took place was calculated by calculating the number of days between the initial listing and the most recent price change. This number of days was then converted into a percentage of a year. 5. To arrive at the final number, the price change percentage was then divided by the percentage of a year that applied. Increase in Base Sales Price in Baseline Corridor New Home Subdivisions Date Percentage Calculated Appreciation Aug % Sep 200 * Nov % Jan % Mar % May % Jul 200.0% *Not Calculated The conclusion we arrived at was that the average new home base price has increased at a rate of at least.% per year for the last couple of years! The table above shows the appreciation that we have calculated over the last year. Note that this calculation is a rolling average and not just an average for that two month period of time. But, what s the Significance After reading this you might still ask, how significant is the Baseline Corridor in the Phoenix New Home market? The answer is very significant! More than ten percent of the non age restricted New Home communities in the valley are in the Baseline Corridor, 5 of 66 subdivisions. If you don t check out what is here, you may miss the opportunity for ten percent of your sales. By our estimate there are about 20 sections of land in the active portion of the Baseline Corridor that can potentially be developed (this is not including the land in the subdivisions that are currently selling or areas which are built out). It is likely that before all of that land is built out, the area north of Broadway and south of the Rio Salado Wildlife Preserve will yield several more sections of land for development. Twenty sections of land equates to 2,800 acres. To understand the magnitude of this, compare it to Anthem by Del Webb. When completed, Anthem will use 5,800 acres. The Baseline Corridor will accommodate more than two and one half times the number of homes which will be in Anthem! Take that Baseline Corridor Excursion Today! I hope this has convinced you to get in your car and take an exciting adventure to South Mountain! If not, let me offer you a few more tidbits. This area is being referred to by many who are familiar with it as The New Ahwatukee. There are three awesome golf courses in this area. Rio Salado Preserve along the Salt River is being planned as a wonderful nature preserve. These are just a few more examples of the availability of quality activities and great value. Want More Information?. Take the tour 2. Start a notebook for this area and include the Baseline Corridor pull-out section. Pursue these information sources. Give me a call LEGACY VILLAGE City Blocks of Shopping 2th ST. 2nd ST. BASELINE ROAD All rights reserved. Copyright 200 by Ultimate Information Systems, Inc. Reproduction in whole or in part without the express written consent from the publisher is prohibited. The information provided is deemed reliable but not guaranteed and is subject to change without notice. 8